A bit of friction in payment makes buyers feel safe

Despite advancements in digital payment solutions, customers need a bit of reassurance in payment transactions, a new study by Paysafe finds.

Concerns over security and data privacy have resulted in some UK consumers avoiding frictionless payment solutions.

Only 28% of UK consumers have used frictionless payment features in apps, even though they are aware of the feature. Just over half, 52%, of UK respondents to the survey, are worried about fraud and 43% are concerned over how their personal data might be used.

Biometric payments are gaining acceptance with 22% of participants having tested a voice-activated payment system and 49% British smartwatch owners using their electronic device to make a payment.

Retail automation that includes frictionless payment has less resistance. 39% of British consumers would let their smart refrigerator re-order food from an online grocer, but 43% don’t expect to adopt this technology in the next two to three years. UK consumers have other concerns with ‘invisible’ payments

28% are concerned systems may inadvertently buy things.

26% are worried spending may not be controlled.

41% of consumers say they are already losing track of their subscription-based payments and are thus wary of adding new services such as fridge-based re-ordering.

Consumers are still most comfortable paying in cash. 88% of all of those surveyed had used cash to make a purchase in the past month, but the popularity of cash is waning as consumers become more comfortable with cash replacement systems.

In every country in the survey, consumers reported that they carried less cash than they did in the previous year; 62% of Britons, 56% of Canadians, 55% of Americans, 38% of Germans and 34% of Austrians.

And 61% used a digital wallet for an online purchase in the past month—higher than the number of consumers who entered their credit or debit card details directly.

Contactless payment has continued to grow rapidly in the UK, where 54% of consumers have used it in the previous month.

By comparison, contactless payment use over the past month by consumers in the US was only 3%, though 40% of Americans said they had tried contactless payment in 2017. In Canada, 58% of consumers tried contactless last year but only 19% used this payment method it in the last month.

Oscar Nieboer, chief marketing officer, Paysafe Group, says:

“Despite the apparent benefits of low-friction payment technologies, these findings suggest many consumers aren’t ready to lose visibility of the payment process. It’s clear that the benefits are not unilaterally agreed upon, with cultural and infrastructure trends at play, and it may be some time before adoption is widespread. In the meantime, there’s a need to continue servicing the cash consumer, as well as providing options for contactless payments as the UK is so advanced in this area of payments compared to other countries.”

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The report highlights a “convenience versus risk paradox” on fraud and consumers are split on how this risk affects payment behavior locally:

Consumers in the UK experienced increases in the amount of fraud in the past year, reporting a jump from 27% to 33%.

Globally, 18% of credit card users say they have experienced fraud, 15% of bank card users suffered fraud on their card, and 15% of digital wallet users were targeted.

Most UK fraud is under £100 in value and 69% of consumers say it was resolved within a week.

65% of Britons and 70% of Americans believe online fraud is inevitable, but only 28% of Germans and 26% of Austrians hold the same view.

More consumers in Germany and Austria choose to pay by invoice rather than debit card. 55% percent of Austrians and 49% of Germans say it feels safer.

Nieboer adds:

“If retailers, merchants and payments companies want to disrupt the old way of doing things they must make all underlying processes feel secure. Consumers want convenience, but they want protection too. They are making sensible choices when it comes to security and are willing to change what they’re used to ensure they’re not at risk of fraud. For instance, nearly four in five Britons prioritize the use of a website that already has their payment details — the highest amongst the countries surveyed in this report.”

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Varying payment habits can also impact local tourism, with countries where a cash-free lifestyle has been adopted reporting that visitors are uncomfortable with local payment methods.

Visit Sweden recently highlighted this issue, saying that tourists are complaining over Sweden’s nearly ubiquitous cashless payments. The lower risks of loss or theft means that many outlets that appeal to tourists — like cafes, bars and restaurants — only accept payment by debit or credit card.

“The Germans want to avoid the charges which banks take out on card payments, but they also cite deep-rooted privacy concerns when they consider why they want to be able to use cash. For the Brits, it’s more purely the bank charges which annoy them.”

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The Paysafe findings result from research conducted with 5,056 consumers in UK, US, Canada, Germany, and Austria in April 2018.